Origins of Egypt’s crisis are not economic

Origins of Egypt’s crisis are not economic

Guest blogger David Bresnahan-McRae argues that restructuring policies favouring specific parts of Egyptian society are the real origins of inequality and the current crisis in Egypt.

The recent crisis in Egypt has resulted in more than 600 casualties and nearly 4,000 injured due to clashes between the Muslim Brotherhood and the Egyptian security forces. A trend in recent analyses has characterized the economic causes of the upsurge in violence as a problem stemming from overpopulation and geographical deficiency.

Egypt’s population has increased by 12 percent since 2000 to nearly 80 million people. As a result, the youth population (15-29 years old) has grown to about 25 percent of the total population, with over half facing poverty and unemployment. Additionally, water shortages and declining oil exports have forced food prices to skyrocket. Consequently, it got to a point where the expanding population was no longer able afford the cost of food. So people translated their economic grievances into political demands against their government in 2011, and among themselves in 2013.

However, this explanation obscures the decades-long process that made economic inequality become entrenched within the structure of Egyptian society and brought the present crisis to a head.

Economic restructuring policies put in place by the Sadat and Mubarak regimes at the behest of the United States Agency for International Development (USAID) and the International Monetary Fund (IMF) promoted the growth of exports as the solution to Egypt’s economic problems. These policies required the removal of price subsidies, along with the privatization of healthcare and education, as conditions for economic assistance.

Furthermore, these reforms encouraged the diversion of basic foodstuffs from human to animal consumption to increase the production of meat. The Egyptian government, in concert with USAID and the IMF, subsidized the import of staples for consumers, heavily taxed the grain production by Egyptian farmers and subsidized the production of meat, poultry and dairy products. Egypt became reliant on grain import from the United States (a product subsidized by the government) and shifted the internal market towards more expensive items. This allowed the rich minority to have greater access to food, while simultaneously pricing the poor majority out of the market.

Therefore, the problem is not that there are too many people living in an inhospitable environment, but rather that policy decisions made by the international and domestic power structure have shifted Egypt’s resources from staple foods to more costly items of consumption. Consequently, these policies laid the groundwork for the continued instability since January 2011.

Increased unrest in Egypt has the potential to create a worldwide economic shock as oil prices would skyrocket in the event of the Suez Canal’s closure. In order to quell the present conflict, the international community should reverse its understanding of the issue as one of demography and geography. Instead, focus should be directed at ending the cycle of economic mismanagement and understanding the crisis as a rejection of inequality and powerlessness.

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